Brent steadied near $80 a barrel as Saudi Arabia dismissed using its oil wealth as a political tool following the killing of journalist Jamal Khashoggi.
Futures in London rose as much as 0.8 percent. Saudi Arabia’s Energy Minister Khalid Al-Falih said his country has used its oil responsibly and separated it from politics, according to an interview with Russia’s TASS news agency. He said the kingdom has no intention of repeating the 1973 oil embargo, in which it and several regional allies squeezed supplies to the U.S. and Europe.
Crude has fallen about 7 percent after reaching a four-year high earlier this month as a darkening demand outlook, coupled with stock market routs around the world have spurred a flight from risk assets. Still, Saudi Arabia’s admission that Khashoggi was killed in its consulate in Istanbul may strain the kingdom’s ties with the U.S. at a time when American sanctions on Iran are set to squeeze exports from the OPEC member.
“The Saudis admitting that Khashoggi died in the consulate may make some nervous about how the West reacts, but al-Falih saying that they will continue to increase output, and won’t use oil as a weapon isn’t as constructive,” said Warren Patterson, commodities strategist at ING Bank NV.
Brent for December settlement was at $79.94 a barrel on the London-based ICE Futures Europe exchange, up 16 cents, as of 11:17 a.m. local time. The contract fell 0.8 percent last week. The global benchmark crude traded at a premium of $10.50 to West Texas Intermediate for the same month.
WTI for November delivery, which expires Monday, traded 8 cents higher at $69.20 a barrel on the New York Mercantile Exchange, after declining by $2.22 last week. The nearest timespread on the U.S. benchmark touched its weakest level in 11 months intraday on Friday, a sign of oversupply.
Saudi Arabia will raise its output to 11 million barrels a day “in the near future” and has the ability to lift production as high as 12 million barrels a day if the market requires it, Al-Falih told TASS.
Meanwhile, American explorers expanded drilling activity in oil fields for a second week despite a dramatic pullback in the frack work needed to put the finishing touches on new wells. More than 100 additional rigs have been deployed across U.S. fields this year. American crude production has remained above 10 million barrels a day since February.
Other oil-market news: Hedge funds cut bets on rising WTI crude prices for a sixth straight week to the lowest since October 2017. Total wagers, long or short, were near the lowest in two years. BP Plc and Eni SpA could re-start work on a project in Libya in the first quarter next year, setting the stage for the OPEC member to boost production by “hundreds of thousands of barrels” a day, National Oil Corp. Chairman Mustafa Sanalla said.